- June 15, 2020
- Posted by: Ganeshcbani
- Category: Blog
Rejection of Personal Loan
A personal loan is a flexible unsecured loan, which can be refused for a variety of reasons. Multiple personal loan refusals may increase your difficult inquiries and ultimately negatively affect your credit score. Hard queries are an indication that you hunger for more loans and the lenders might expect you to be a risky borrower. If your recent application for a personal loan was denied, you may want to find out why the rejection was made. Read more about why your application for a personal loan could be refused.
With a low Credit Score
A low credit score is ample ground to refuse your application. A credit rating can vary between 300 and 900. The higher your score, the better your chances are to receive personal loan approval. A score of 750 or higher is the ideal score for a quick sanction. Here’s how the personal loan with bad CIBIL score can be obtained. So, stop improper loan fees, pay off unpaid balances, and don’t over-use your credit card.
Multiple Banks/Finance Enquiries
Whenever you apply for a personal loan , the bank enquires with the Credit Bureau about your credit report and controls your credit score. The credit office sees these as tough questions and mentions them in your credit report. When applying for more loans at the same time, most lenders and financial institutions view you as a starving person who can not manage his / her money properly and is just searching for the money he / she borrows.
Multiple loan applications will also have a negative effect on your credit score. For order to prevent such a scenario, you must perform your research properly and compare your choices for advance rather than having too many credit applications. Upon considering and taking into account all valued options, apply for the only loan you want to use.
Higher current debts
If your existing debt is on the higher side, your personal loan application can be denied. If you currently have too many open credit lines, such as credit cards and loans, your potential lender, in which you apply for a personal loan, will consider you overloaded and may end up in a default. Your high debts endanger you in the eyes of the lender, which may lead to the denial of your personal loan. The only way to avoid this is to pay off your existing loans and then apply for a new personal loan.
Sometimes, a number of borrowers deliberately minimize their debt repayments in order to get a higher amount of debt. This will easily mislead them, however because lenders refer to their credit reports before approving the loan amount, and all of the existing debt obligations are necessarily covered. This kind of misunderstanding can thus also lead to your personal loan application being denied.
Annual income criteria not met
Lenders pay attention and check your repayment capacity. Therefore, if you do not have a steady job, the lender will probably assume that you do not have the financial means to deliver the loan in time. Therefore, don’t apply for a loan if you just switched jobs. In the absence of a job, make sure other sources of income, such as interest payments or rental income, help you pay EMIs on a regular basis. This helps you to conveniently secure a personal loan.
Requirement for employment
Banks are exclusively providing personal loans to doctors, Chartered Accountants, private limited companies, public sector employees, including central , state and local bodies. If you do not fall into this group, your application for your personal loan will likely be denied.
You may sometimes work in a private company and still be rejected for your personal loan. This could happen if the business for which you are employed is under the de-listed companies group in the bank.
Remember that the lenders will check everything they provide in your online application for personal loans. Therefore, double-check the information you supply before you apply for your personal loan. If your information is inconsistent, the creditor correctly rejects your loan application.
While personal loans are offered at reasonably high interest rates and are regarded as one of the last credit options, they are generally favored in cases of urgent cash requirements especially where a low processing time is the decisive factor.
Phase for Personal Loan Verification
The process of personal loan approval for existing customers is simple and much faster. They can apply online and obtain pre-approved personal loan offers at competitive interest rates. The loan amount is immediately credited to your account.
For other customers, the application process is different. The borrower must apply for personal loans online or download the application form directly from the official website or visit the nearest bank branch. You can also call on the bank to continue the application process.
A representative of the bank will collect the filled out application form and all necessary verification documents. The bank will check the background on the personal and professional data of the customer. If discrepancies exist with the information provided, the application for personal loans is likely to be denied. The status of the approval process moves to the final level after passing through the document verification and eligibility criteria. In the final stage, the rate and tenure are fixed and forwarded for your recognition.